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UPDATE 1-China sees rocky export rebound, shrinking surplus

Published 10/31/2009, 12:52 AM
Updated 10/31/2009, 12:54 AM

* China sees 2009 trade surplus $180-190 bln

* Full-year fall in exports seen at less than 20 pct

* Export environment to improve in 2010, but problems remain

* Protectionism poses a threat to exports (Updates with Commerce Minister comments on trade surplus)

BEIJING/SHANGHAI, Oct 31 (Reuters) - China's exports face a "hard and tortuous" path to recovery as uncertainties dog the global economy's gradual return to health, with this year's trade surplus set to shrink from last year's record, the Commerce Ministry said.

Commerce Minister Chen Deming told a conference on Saturday that China's trade surplus was expected to fall to $180 billion to $190 billion this year from last year's record $295.5 billion.

The surplus was $136.4 billion in the first nine months of the year.

With China's economic recovery relying heavily on government spending to boost domestic demand, imports have seen greater improvement than exports in recent months.

Exports in September were 15.2 percent below their level a year earlier, beating forecasts of a 21 percent fall, although the government expects a double-digit fall for all of 2009.

In a statement released late on Friday on the ministry's website (www.mofcom.gov.cn), it said the full-year fall in exports compared with the previous year should be less than 20 percent.

"In 2010, the world economy will hopefully see a gradual recovery, and the environment for Chinese trade will gradually improve," it said.

"But as there is not yet sufficient strength in the global economic recovery, many problems and contradictions have yet to be basically resolved. The recovery will be hard and tortuous, and it will be hard to see an obvious recovery in international demand in the short term."

Net exports shaved 3.6 percentage points off headline GDP growth of 8.9 percent in the third quarter as Chinese manufacturers continued to reel from a slump in global trade.

Protectionism in these straightened times was a particular worry, as was increasing competition, the ministry said.

"At present some nations are conducting probes into Chinese goods, which is causing yet further obstruction for a recovery in Chinese exports," it said.

A U.S. trade panel on Friday approved the eighth government investigation this year into charges of unfair Chinese pricing practices in a case in which U.S. companies want a nearly 100 percent duty or more on $382 million of imported steel pipes. [ID:nN30423188]

Still, there were signs for optimism, the ministry added.

The government was continuing to provide help to exporters in the form of export tax rebates, and numerous new markets awaited Chinese firms.

"There is a bright future for developing trade with newly emerging markets," it said. (Reporting by Ben Blanchard in Beijing and Fang Yan in Shanghai; Editing by Nick Macfie)

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